How to Grow Business Through Brand Licensing

The Global Licensing market is over $300 billion with some 40 brands logging more than $1 billion in annual licensing sales. It would not be an exaggeration to say that some of the brands are doing better in the licensing segment than their core operations combined.

Such is the power of a good, licensed brand.

Following the trend, almost all the premium and luxury brands are also riding the wave of collabs and licensing. Think of it, two well-established brands with a completely different set of audiences coming together that not only gives the newly launched project a 2x strength but also increases the target pool that you already had. A very good example of this could be the Kobe AD -Nike Collection. However, it’s not just limited to increasing your audience pool. Brand Licensing is a very effective strategy to enter a new market. The best part is that there is nothing like a standard template of product launch in licensing. It’s about how creative one can get in terms of your brand extension keeping the brand ethos in mind. Kobe -Nike Shoes were launched in 2016, to mark the retirement of the legend from basketball and was very popular amongst all segments be it sports lover, basketball lover, or just trend followers. It became a fashion statement.

More than a decade ago when half a century-old FMCG brand Pepsi decided to launch its apparel collection in the US market through licensing, who would have thought it would create a rage in the fashion industry. In 2019, there again was a demand for the Pepsi Apparel collection in India and I was spearheading the project, the Pepsi collection was launched in 2021 by Flying Machine and the designs and range were welcomed by every age group with arms wide open.

The brands with a stronger recall value and name should understand that it’s not necessary that they remain in the segment of their expertise. Likewise, the new manufacturers and retailers should know that marketing and building a brand is tough these days. Even when you have a significant manufacturing and supply chain it's not necessary that you have the expertise to build the brand, burn money to market it and gain customers’ trust at the same time. It’s a longer process than you could imagine. Hence the concept of licensing makes sense both for the licensor and the licensee.

Amongst other things, the pandemic has also taught us that, to pivot and adapting is a must for every business irrespective of being small or large. A lot of brands had faced losses due to lockdowns and hence being available in multiple segments is what will keep you afloat. While the entire world struggled to sustain another surprising point to note is that consumers spent $315.5 billion worldwide on licensed merchandise in the year 2021, which was roughly about 8 percent more than the pre covid era. One important reason behind this could be that a lot of corporates were and are still working from home and every individual is now gravitating toward a better and more comfortable lifestyle at home. And what better than to surround yourself with the consumer products and brands that you trust.

The brands which have a legacy are bound to get consumers' attention even in a new segment.

That’s the reason why the 130-year-old American brand, Westinghouse which is predominantly present in the Nuclear, Solar, and power segment, entered the Indian market. They got a great response from consumers. They thrive on technology and brand legacy that creates an instant connection with the target consumers. Hence television and smaller appliances quickly got popular amongst the millennials.

Small medium and large Business owners need to understand that if they are at the peak of their business or struggling to create a name in the market, brand licensing can grow business for both segments equally. Why do you think Puma X Emoji collab happened? Because collection deals like these allowed both businesses to share reputation, and expand market reach. Taking a completely different example, brands like John Deere and Harley Davidson have been so successful in launching their merchandise that the licensing arm has now become a successful lifestyle business that goes way beyond their core product. Then there is character licensing, where nostalgia and current trends are the only key factor. People get obsessed with authentic Marvel or friends or their favorite Disney characters merch. Deals like these give products more authenticity and credibility that otherwise would take decades to build. If at all we have learned from the changing world is that a fast-changing trend combined with nostalgia and a class-apart product is the best recipe for success. Hence justifying my point that no matter how small or big a business you have, licensing will only grow it further.

Also, not just in consumer/lifestyle products, we are talking about licensing in the Hybrid segment as well, which is catching pace. Playboy just recently launched its flagship club in India, Marie Claire Paris Launched its Salons, Charlie Chaplin vegan restaurants, and Billboard Cafe, all these are examples of successful hybrid concepts of licensing where brand partners have realized that licensing just not only works in merchandise but value and recall can be created in an experiential format as well.

Not just existing traditional business, Licensing is now catching up with D2C brands as well as in NFT and metaverse. Earlier the notion these newly launched brands had in mind that they should only work on promoting their brand, even removing the brick and mortar from the picture. However, that’s changing now, while India is still to catch up with the notion which is changed by several D2C platforms now. Companies like The souled store, Bewakoof have been doing authentic merchandise sales for a few years now. In fact, they can be credited to introduce the fashion of authentic licensed merchandise in India. As DTC companies increasingly go direct to brick-and-mortar retailers, their prospects for licensing are also rising.

Apart from bigger and renewed collaborations and licensing deals, I have also seen some unconventional deals that have made me believe that there is definitely a market for every brand and every product. You just need to know your segment. There was a Goa-based Apparel manufacturer who partnered with Frida Kahlo to launch some bright and amazing bigger print apparel range, which was specifically for a niche segment. The launch was successful, and the partnership was extended.

The electronic segment is another such category that has suddenly grown in the past 5 years exponentially for the Indian market. The consumer products in the electronic segment are a category where people want to only go with very selective brands. Hence, it’s important for brands with trust and legacy, and product expertise to make those products available to the consumer by taking the path of brand extension.

Building a brand is tough and gaining the trust of your customers is tougher. If you are new, then unless you have a marketing strategy like a boat or a product like Sugar it’s difficult to make a mark for yourself and build the consumer’s trust. Though, brands like sugar and boat also have a scope for licensing to do some limited-edition launches. In a hypothetical scenario, imagine the BOAT X Batman collection or the Sugar X Disney range of colorful trendy collections.

To put this in a nutshell, let’s look at how licensing can help you grow:

1. See where you can expand your audience: If you are into the Consumer Electronic manufacturing segment, check which other brand can get expand your audience. For example, if you already cater to the youth maybe you can bring in some brand that has a legacy and nostalgia that can attract a mature audience as well, hence growing your audience pool.
2. Partner with a good brand with a legacy or a story: The best part about licensing is how the products can tell a story and that’s important. When you are going for a partnership make sure the brand definitely has a story that you can associate your products with.
3. Go for collaboration: When two or more businesses join hands, they mutually benefit from each other. They help brands engage with their audience and enhance their fan base.
4. Build a legacy: Today, brands should not emphasize sales and profit maximization, but they must serve customers with their needs and upgrade their offering from time to time to be the foremost choice among the target audience.
5. Product positioning: When you partner with any brand and you already have an existing product, make sure the newly launched products are positioned differently in terms of quality, pricing, reach, etc.

(This article is contributed by Shipra Dubey, Brand Consultant, Westinghouse India)